Question

Providence Hospital generates monthly performance reports for each of its departments. The hospital must maintain an adequate staff of attending and on-call physicians at all times, so physician costs are not affected by the number of patient visits. But all other costs do vary with patient activity. Nurse-hours are used as the activity measure for nursing costs, and patient visits are used as the activity measure for the cost of supplies and other variable costs.

The head physician of the hospital's emergency room, Yolanda Mortensen, is responsible for control of costs. During October, the emergency room unit expected to treat 4,100 patients but actually treated 4,200 patients. The following additional information for October is available:

	Budget	Actual	Variance
Nurse-hours	2,460	2,604	-144
Nursing costs	$56,580	$32,000	$24,580
Supplies & other variable costs	$45,100	$26,800	$18,300
Fixed costs	$99,700	$98,500	$1,200

Required
Compute the flexible-budget variances for each of the cost categories for October (NOTE: enter favorable variances as positive numbers and unfavorable variances as negative numbers):

  Nursing costs    

  Supplies and other variable costs    

  Fixed costs    

Answer 1

Flexible-budget variances:
Nursing costs	27892
Supplies and other variable costs	19400
Fixed costs	1200
Workings:
	Actual costs	Flexible Budget	Variance
Nursing costs	32000	59892	27892
Supplies and other variable costs	26800	46200	19400
Fixed costs	98500	99700	1200
	Flexible Budget
Nursing costs	59892	=56580/2460*2604
Supplies and other variable costs	46200	=45100/4100*4200